Capitalism operates only on the basis of private costs, only private costs are rewarded and repaid, and not social costs. And even in a competitive c… - Oskar Lange

I have pointed out that the real source of the superiority of Marxian economics is in the field of explaining and anticipating a process of economic evolution. It is not the specific economic concepts used by Marx, but the definite specification of the institutional framework in which the economic process goes on in capitalist society that makes it possible to establish a theory of economic evolution different from mere historical description. Most orthodox Marxists, however, believe that their superiority in understanding the evolution of Capitalism is due to the economic concepts with which Marx worked, i.e. to his using the labour theory of value. They think that the abandonment of the classical labour theory of value in favour of the theory of marginal utility is responsible for the failure of "bourgeois" economics to explain the fundamental phenomena of capitalist evolution. That they are wrong can be easily shown by considering the economic meaning of the labour theory of value. It is nothing but a static theory of general economic equilibrium. In an individualistic exchange economy, based on division of labour, in which there is no central authority to direct which commodities, and in what quantities, are to be produced, the problem is solved automatically by the fact that competition enforces such a distribution of productive resources between the various industries that prices are proportional to the amount of labour necessary for producing the respective commodities (these being the "natural prices" of classical economics).

Planning and the market do not exclude each other. Planning may utilise the uniformity of behaviour patterns of units operating in the market as one of the means of influencing their decisions. This happens, for instance, when the planning authority imposes tariffs or pays subsidies in order to influence the quantities bought or sold. Sometimes regulation—a special method of planning—is necessary in order to enable the market to achieve co-ordination of the units' decisions. The two methods of co-ordination co-exist with each other. However, in different historic societies, one or the other of these methods plays the preponderant role and appears as the chief means of co-ordinating all the units in the economy. The development of economics as a science is closely connected with the growing preponderance of the market in modern times. The co-ordinating operation of the market and, at times, the failure of the market to achieve co-ordination of decisions have posed the intellectual problems which have led to the emergence and growth of economic science.

It seems to us, indeed, that the real danger of socialism is that of a bureaucratization of economic life, and not the impossibility of coping with the problem of allocation of resources. Unfortunately, we do not see how the same, or even greater, danger can be averted under monopolistic capitalism. Officials subject to democratic control seem preferable to private corporation executives who practically are responsible to nobody.